Custom Lean Hogs Essay

Lean Hog refers to industrially raised pigs that can be easily traded in mercantile and option exchanges. The hogs are bred twice a year in a cycle designed to ensure steady production. They have a gestation period of 3-1/2 months and an average litter size of 9 pigs.

Lean hog future prices started in 2001 on firm footing; posting a high record of 107.475 cents a pound in August the same year. This was the highest trading of hog futures since it began to function in 1966. The driving factors to the bullish nature included increased exports from U.S. to Japan and South Korea which experienced calamities. The prices then decreased reaching a year low at 84.300 cents a pound in December 2011.

The largest pork producers in the world are China (49% of world production in 2011), the European Union (22%), and the U.S. (10%). In the U.S., the largest hog producing states are North Carolina, Iowa, Minnesota and Illinois. However, U.S. is the largest exporter.

Chicago Mercantile Exchange is the center where trading on lean hogs occurs. The trading ticker symbol is LH. Symbol HE is used for electronic trading. Settlement is done through cash and based on the Lean Hog index price. The index is a 2-day weighted average net price.

A market hog yields lean meat which has a high worldwide demand. The U.S. is the lead consumer of pork meat. World pork production fell in 2011 by 1.6% yr/yr to 101.127 million metric tons. However, the USDA is forecasting a rise in 2012 of +2.2% to 103.433 million metric tons. The price may be affected by prices of corn which is the main feed for hogs.